Spencer Dinwiddie Cred savings platform
Cryptocurrencies,  People

NBA star Spencer Dinwiddie teams up with Cred for crypto lending, savings

With plans to tokenize his salary yet to materialize, the Brooklyn Nets’ guard is offering fans 10% interest and cryptocurrency-backed loans.

As he still battles to tokenize his lucrative NBA contract, Brooklyn Nets star Spencer Dinwiddie has come up with a back-up plan: offering a savings platform for cryptocurrencies.

Through the partnership with Cred, a California-based lender, users can “pledge” digital assets such as Bitcoin and Litecoin—as well as stablecoins including Tether. In return, Dinwiddie says he is promising up to 10% interest at maturity, billing this as compelling returns when Wall Street has just entered into a bear market, with cryptocurrencies recently losing billions off their market cap.

NBA star Spencer Dinwiddie is shooting for a new cryptocurrency lending platform. (Photo: Cred).

Lending is also set to be offered through Dinwiddie and Cred’s collaboration, as crypto assets can be used as collateral to obtain loans. Announcing the venture, the basketball player said part of the revenues generated through this initiative would be devoted to good causes that provide scholarships to disadvantaged young people.

Dinwiddie said: “It’s important for me to bring value to my fans both on and off the court. I believe blockchain can radically reshape the nature of financial services for the better, and the Cred team is well-positioned to make this happen.”

Dan Schatt, the co-founder and CEO of Cred, was equally enthusiastic about the collaboration. He added: “We’re thrilled that Spencer is using his platform to bring awareness of the power of blockchain to make money work harder and smarter in challenging market conditions and we are delighted to support Spencer in our collective mission to democratize financial services through blockchain.”

High rates, high risks

Cryptocurrency platforms have been offering sounds-too-good-to-be-true interest rates for deposits used for lending for some time. On March 17, decentralized finance (DeFi) firm BlockFi raised interest rates to as much as 4.5% for ether deposits and 6% for bitcoin deposits, while keeping GUSD and USDC stablecoin rates at 8.6%. In January, Celsius Network announced compounding interest rates of up to 10%. The Binance exchange currently offers up to 15% annualized interest on funds used for 30-day loans. 

Compare that to U.S. banks, which have long been offering between 1% and 2% on deposits, while the U.S. Federal Reserve just cut rates to between 0% and 0.25% as a coronavirus emergency measure. 

But, risks are equally high in the volatile cryptocurrency market. In May 2019, for example, a “flash crash” in the price of CLAM tokens caused lenders on Poloniex a loss of 1,800 bitcoins in a day, which was shared among all lenders.

Tokenizing an NBA contact

Dinwiddie has ended up in a prolonged battle with the National Basketball Association in his quest to tokenize his three-year, $34.4 million contract and sell it to investors on the Ethereum blockchain.

When the plans were initially drawn up, Dinwiddie was told in no uncertain terms that it violates the league’s collective bargaining agreement which states players cannot “assign or otherwise transfer” their salaries. In January, he went back to the drawing board—repositioning his offer as a fiat bond that wouldn’t offer performance incentives. Ninety of them were going to be sold for $150,000 a piece to wealthy investors, and they were scheduled to launch on January 13. 

These bold plans to push forward came despite the fact that the NBA has yet to agree to his idea—merely saying that it was under review. Indeed, as of March, the Spencer Dinwiddie bond was not forthcoming, with the basketball star hiring FINRA-registered Tritaurian Capital to handle the offering.

Updated 3:00 p.m. on March 23, 2020 to change main image and correct Dinwiddie’s record.

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Connor Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.